Yesterday I read an article from a popular trading website that said…

Traders will NEVER be confident with their trading until they’ve actually traded.

While this sounds logical, it’s unfortunately incorrect. Let me explain.

I remember way back when I started out trading, I was VERY confident in my trading ability, and the results I was going to achieve.

I was confident I’d make a fortune trading, and that within a year or 2 I’d be a millionaire trader living a life of luxury. The type of “beaches, babes, benjamins and bugattis” life you see the trading scammers promise.

And for a while, I did OK trading (minus the bugatti), until… 2008 hit.

Here’s the things I didn’t know:

  • I didn’t understand the difference between in sample and out of sample performance (huh, what’s out of sample?),
  • I didn’t understand curve-fitting, robustness testing, survivorship bias, leverage or liquidity,
  • I didn’t understand the different market environments and what the markets can really do when the sh!t hits the fan,
  • I didn’t understand the dangers of a single trading strategy or the power of portfolios,
  • I didn’t understand my personal drawdown tolerance,
  • And a whole bunch of other aspects of trading I was completely oblivious about.

But I sure was confident, because I didn’t know any better!

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It was only after I started trading that I realized how little I knew about trading and my confidence took a hit, REDUCING to a level that was far more realistic for my knowledge and experience.

This confidence was an expensive and painful journey for me, and it also hurts many other traders.

Fast forward 10+ years and now my confidence in trading is entirely different:

  • I’m confident there is still alot I don’t know about trading (and probably never will) and I approach all aspects of my trading with this in mind,
  • I’m confident I know what to do when things don’t go so well (which will happen from time to time),
  • I’m confident there is ALWAYS more to learn and improve, no matter how good my results are,
  • I’m confident there will always be things that happen in the market that I never thought would or could happen,
  • I’m confident that my confidence will NEVER reach the level it was at when I started because it was completely unrealistic – and this is what really hurts traders.

Trading often makes you LOSE confidence, especially if you’re just focused on the P&L results.

One of the best ways I know to increase confidence in trading (even before your money is on the line) is to find an approach you know is working for others first. It’s a valuable first step in creating a base you can build on. Then spend some time proving the approach to yourself.

Test it.

Adapt it.

Make sure it fits you.

And if you find yourself completely confident in every aspect of trading, you’re probably setting yourself up for some pain (like I did). Scepticism and uncertainty are actually healthy and can help in our long-term survival as traders.

If you’re looking for more tips to improving your trading, download the FREE ‘Algo Trading Blackbook’ – it contains 71 tips to transform your trading (and ultimately give you more confidence).

Happy trading,



DISCLAIMER: Trading involves significant risk of loss and is not suitable for everyone. People can and do lose money. Hypothetical results have many inherent limitations. Past performance is not necessarily indicative of future results.

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